Microsoft-Skype: A win for Facebook, loss for Google

The Microsoft purchase of Skype for $8.5 billion has benefits for Facebook, and leaves Google scrambling in the dust.

Microsoft announced today that it purchased Skype for $8.5 billion. After a week of speculation about a possible acquisition by either Facebook or Google, the Microsoft news has shocked the tech world and stolen Google's thunder on the opening day of Google's I/O conference.

Ironically, I had been working on writing something up regarding the pros and cons of Facebook-Skype and Google-Skype to analyze which might be a better fit for Skype, and which combination would yield a better end result for businesses and consumers. It seems, I can throw that out...but not entirely, because Facebook and Google are both still affected by the Skype purchase.

According to the Microsoft press release announcing the Skype purchase, "Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms."

That last part is crucial. Skype is established as a communications platform across virtually all operating systems and mobile platforms. Pulling the plug on Skype for platforms other than Microsoft's own would be a huge blow to the many businesses and consumers that rely on Skype, and a huge mistake for Microsoft.

With the purchase, Microsoft strengthens its communications portfolio and expands the integration and capabilities of products such as Microsoft Office, and Xbox. According to Rob Enderle, principal analyst with the Enderle Group, though, the strategy behind buying Skype is as much or more about making sure Google didn't buy it as it is about what Microsoft gains from the transaction.

Google already has Google Voice, but Google has struggled to establish the service as much more than a novelty. Purchasing Skype would have bought Google instant credibility with VoIP and video chat, and it would have provided Google with the core experience and skills necessary to become a leader in the space. Now, it will have to continue doing things the old-fashioned way, and go head to head with a revitalized Microsoft, and -- by proxy -- Facebook.

Enderle is less than optimistic that Google would have actually been capable of leveraging the value of Skype. "This might have improved Google far more, however Google is very cliquish inside and the more tenured employees would likely have prevented the Skype folks from having the impact they otherwise would have had."

A Microsoft-Skype marriage is better for Skype than a Facebook-Skype marriage. Microsoft is larger and more experienced than Facebook, and will most likely be a better steward of Skype technologies and intellectual property. But, because of the relationship between Microsoft and Facebook, Facebook still stands to gain from the purchase.

Overall, it seems like a win for Microsoft, a win for Skype, a win for Facebook, and some bad news for Google.

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Tags business issuesMergers / acquisitionstelecommunicationskypeGoogleMicrosoftvoipFacebook

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Tony Bradley

PC World (US online)
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